Businesses fear 'double dip' could prove too much

MORE than a quarter of small businesses fear they will go under if the UK suffers a 'double dip' recession, according to research released yesterday by R3, the insolvency trade body.

The study suggests that many businesses have been worn out by the struggle to stay afloat during the slump.

Peter Sargent, the R3 president who is a partner at the Halifax office of Begbies Traynor, said: "The low level of business confidence is to be expected. Many struggling businesses drew heavily on their reserves in order to survive and their resources have now begun to run out.

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"It is easy to forget that banks are not a company's only creditors, for many their largest creditor is the Government.

"With close to 300,000 firms in crucial 'time to pay' tax arrangements with HMRC, it seems that a large number of businesses are in need of a financial health check."

The research found that the hotel and catering sector was the least positive with almost half (47 per cent) of businesses saying that a double dip could result in their company becoming insolvent.

Manufacturers were more positive. Less than a fifth (19 per cent) of manufacturing businesses believe that they will suffer if the economy falters.

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Mr Sargent added: "It is unsurprising that the services industry feel that they will fare worst if there is another dip, as, although we are technically out of a recession, many people don't feel the worst is over so they are not splashing out on hotels and lunches.

"Post recession, the manufacturing sector tends to be the first to recover as people slowly start to demand more goods."

Altogether 301 small businesses with a turnover of 50,000 to 1m were interviewed by Continental Research earlier this month.

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